With seven credit cards to her name, Meghan Coleman racked up a $15,000 debt. She was still in college.
"My plan was to get a job so I could pay it all off," she says of her time at Villanova University in Philadelphia. "But that didn't happen."
College is a time of transition into adult responsibilities, and using credit cards is one way young people are encouraged to demonstrate their maturity. But with as many as 1 in 5 credit-card holders in college carrying debts in excess of $10,000, observers worry that students are being lured into a spiral of spending beyond their means - and not having any clue about how dire the consequences can be.
"It's easier for a student to get a major credit card than it is for a blue-collar worker," says Robert Manning, a sociology professor at Georgetown University.
A recent study he authored for the Consumer Federation of America found that about 70 percent of undergraduates at four-year colleges have at least one credit card, and most had it by the end of their first year.
The credit card industry, in Dr. Manning's view, is instilling dangerous attitudes toward credit and debt. "Kids are taking on the maximum credit and paying off the cards with minimum payments each month," he says. Interest on most student cards is between 18 and 23 percent.
Companies entice with everything from free T-shirts and candy to discount air fares. "Students tell me that telemarketers start at 7 a.m. in the dorms," Manning says.
For Ms. Coleman, it was the tables set up year-round with sign-ups and incentives that proved irresistible. "My friends and I would see these guys ... they'd be really flirting and alluring. We'd think: We'll get this card then cut it up. Then we'd decide we would only keep it for emergencies. But we would end up buying things ... or taking cash advances just to live on."
The promotions are not aggressive, say credit card representatives, but simply offer a way for students to develop sound fiscal habits.
"The fact is that the vast majority of young adults with credit cards manage to use them responsibly," says Patricia Boerger with the American Bankers Association (ABA). "They use their cards to establish a credit record, meet emergency needs, and manage their finances."
About 59 percent of college students with credit cards pay their balance in full each month - a higher percentage than in the general population, according to ABA statistics. And the average student balance, Ms. Boerger says, is "usually under a thousand dollars."
But Manning and others are concerned about the subset of students who have begun accumulating debt. "Students who come from affluent families are typically bailed out," he says.
"But students from low- to modest-income families end up being victimized," he adds. "Some have to take on extra jobs, others have to drop out of school or take additional student loans just to appease creditors."
Colleges are actually complicit in the process, Manning contends. "The university makes money renting space to the marketers. They license their school name on the cards, then collect a flat fee - a percentage of everything that's charged by faculty, students, and alumni."
Several schools, though, have taken strong steps to separate themselves from the credit card industry.
At John Jay College of Criminal Justice in New York, credit card solicitors became "terribly aggressive and overbearing in terms of the way they were treating the students," says Roger Witherspoon, vice president for student development. The school banned them after discovering that companies sold lists of student names to one another.
Credit card representatives from MBNA, American Express, and Citibank did not return calls seeking comment.
In loco parentis
Most everyone agrees that the consequences of high student debt can be devastating.
Would-be employers increasingly do credit checks on job applicants as a way of assessing their reliability.
In Coleman's case, even though her mother bailed her out of debt twice, her situation almost cost her a relationship, she says. "My boyfriend was concerned about this. He said it was an issue we had to resolve before he could make a long-term commitment to me."
Some schools' credit unions have begun to find ways to help students build credit while avoiding harmful situations. At the Penn State University Federal Credit Union, students are given a $500 credit limit on a major card, and their accounts are monitored frequently, says Dana Marsh, assistant vice president of marketing for the credit union.
In addition to limiting credit available to students, Manning and others suggest colleges and universities should restrict credit card marketing and require a financial-education program during a student's first year.